A mirror of history: China’s bond market, 1921–42

This article provides a quantitative assessment of contemporary beliefs about historical events by econometrically identifying ‘break points’ in China’s domestic bond market from 1921 to 1942. We find that these ‘break points’ usually coincided with the events highlighted by the Shanghai Newspaper–an influential daily newspaper produced during the time of the Republic of China. These events are also generally considered to be crucial by historians–for example, the Japanese invasion of Manchuria and the outbreak of the Second Sino-Japanese War. However, some events to which historians attach great importance, such as the conflicts between Nationalists and Communists in the 1930s, were not reflected in the bond market and did not attract much media attention. Some events, such as the Sino-Japanese ceasefire in Tanggu in 1933, were thought to be crucial by contemporaries, but have been downplayed by later observers.